SAN FRANCISCO: Deep disagreements within the Federal Reserve over the economic outlook and how the U.S. central bank should respond will not stop policymakers from cutting interest rates at a two-day meeting that begins on Tuesday.While an oil price spike after attacks on Saudi Arabian oil facilities over the weekend added to the list of risks facing an economy already slowed by ongoing trade tensions and global weakness, the deep divide evident around the Fed's policymaking table means further rate cuts could be far from a done deal.At one end of the Fed's massive boardroom sit St. Louis Fed President James Bullard and Minneapolis Fed President Neel Kashkari, who are expected to argue for a steep reduction in borrowing costs to counter low inflation and an inverted Treasury yield curve.Pushback from the opposite end is likely to come from Cleveland Fed President Loretta Mester, who opposed the Fed's rate cut in July, and Philadelphia Fed President Patrick Harker, who only reluctantly … [Read more...] about Divided Fed set to cut interest rates this week, but then what?
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LONDON: European stock markets flatlined on Thursday (Jun 4), after an uneventful session earlier in Asia, with trading volumes thin on the US Independence Day holiday, dealers said."European stocks have edged a tad higher while US stock futures are unchanged following Asia's mixed session, one day after new record highs for indexes stateside," said Oanda analyst Dean Popplewell."Trading remains thin due to July 4th US celebrations," he added but sounded caution before Friday's data release of US non-farm payrolls - a key update on the health of the world's biggest economy.'VULNERABLE' DOLLAR"Currently, the dollar trades broadly flat due to the US public holiday but could be vulnerable and ruin traders' weekends if tomorrow's US NFP data comes in on the weaker side."Asian equity markets experienced mixed fortunes, despite a record-breaking performance on Wall Street, as investors turned their focus to Friday's upcoming data while hoping for a big Federal Reserve interest rate … [Read more...] about European stocks steady as US celebrates Independence Day
BlackRock is shorting the Australian dollar on a bet that the central bank will cut interest rates to as low as 0.5 per cent to revive the struggling economy. The Aussie will extend this year's decline and probably fall as low as 65 US cents next year, said Sydney-based Mr Craig Vardy, head of fixed income for Australia at BlackRock, which oversees US$6.52 trillion (S$8.92 trillion). The Reserve Bank of Australia (RBA) will keep easing as the country's economy cools and United States-China tensions weigh on global growth, he said. "I've no doubt that the RBA wouldn't have an issue taking the cash rate below 1 per cent," added Mr Vardy. The central bank wants to see lower unemployment and higher inflation, and is "probably willing to push a little harder to get some traction", he said. Australia's dollar has tumbled about 3 per cent this year as US-China trade frictions and signs of global economic growth slowing weigh on commodity currencies. The Aussie fell to 68.32 US cents in early … [Read more...] about BlackRock shorting Aussie dollar, betting on extended slide
REUTERS: 1/THE FIRST CUT...With President Donald Trump's trade policies heightening fears of a U.S. recession, expectations of a Fed rate cut have dramatically increased in the past month. Money market pricing became even more aggressive after Federal Reserve Chair Jerome Powell threw open the door to a cut, promising on June 4 the Fed would act "as appropriate" to address risks from the trade dispute. It was the second sudden shift in the Fed's tone, after January when it abandoned its bias toward steady tightening.So when would it be appropriate for the Fed to act?The Federal Open Market Committee might answer that question at its June 18-19 meeting. Money markets price a cut by July; by end-2019 they reckon the Fed will have cut twice at least.The CME Group's FedWatch tool shows traders assign an 88per cent probability of a cut in July. They put chances of a June cut at 23per cent, up from around 17per cent a week back. Vanguard, one of the world's largest asset managers, is one … [Read more...] about Take Five: The Fed and the rest
Will Trump murder the 10-year bull market? Since Trump’s May 5 tweet, markets were buffeted by sharp downturns and spikes in volatility. Hope turned to despair as negotiations with China broke down, prompting Trump to implement sweeping tariffs. Many feared that Trump’s latest actions may put the bull market’s longevity to the test. Unfortunately, it turned out that Trump was just getting started. “TARIFF is a beautiful word indeed” – Trump To justify his penchant for using tariffs as his primary tool to deter bad behavior of other countries, Trump tweeted the following on June 1, 2019: “When you are the “Piggy Bank” Nation that foreign countries have been robbing and deceiving for years, the word TARIFF is a beautiful word indeed! Others must treat the United States fairly and with respect – We are no longer the “fools” of the past!” Trump imposes tariffs on Mexico over illegal … [Read more...] about Will Trump murder the 10-year bull market?